Small businesses find better access to benefits.

Jim's Fallbrook Market is the quintessential small business. A traditional room and pop grocery store that has been operating since 1949, Jim's is an anachronism in a space traditionally dominated by massive corporate supermarkets.

In addition to the fierce competition in the sector, Jim's has had to deal with the rising costs of health care insurance for its seven fulltime employees. However, like many small business owners in the Valley, Jim's co-owner, Pat McQuaid offers health care for his employees because he feels a moral obligation to ensure the well-being of his workers.

"At a certain point, you feel like you have to do something for your workers. They need health care and if I have to pay for it, than I don't mind doing that," McQuaid said. "I offer them the choice of money or health care. It's a tough issue with the rising costs, but I'd hate to see one of my employees hit by a truck and not covered. I've seen it happen when you see one of them on their way to County because they aren't covered. That's a difficult thing to see."

McQuaid readily admits that the paperwork and headaches associated with staying on top of the insurance adds to the difficulties of his job and he understandably isn't pleased that the cost of his premiums has risen approximately 25 to 30 percent over the last several years. However, the co-owner of the Woodland Hills market believes that offering health care to his employees makes for a more stable work environment.

"It makes them more likely to stay here. We don't have a lot of turnover because of it," McQuaid said. "We try to take good care of our employees and health care is one more thing to do. When you calculate the cost of training them and hiring new employees, if you can keep an old one, you're money ahead. It's very important in a small shop to have continuity and familiar faces."

In fact, contrary to the thinking among many small businesspeople, small companies can indeed find health benefits for their employees that won't break a firm's budget.

While McQuaid offers the most basic plan from Blue Cross of California, Mark Wheatman one of the principles at Wheatman Insurance Services LLC in Encino says that all small businesses can have their pick from a variety of different plans geared towards them. According to Wheatman, the key to finding an excellent plan at an affordable price is creativity.

"Health care is certainly expensive for many small businesses. You have to find creative ways to purchase the insurance. There are alliances between insurance companies on the health insurance and the workers' comp side; these partnerships will give discounts if you insure with two of the companies within the alliance," Wheatman said. "We try to take advantage of that in any way we can. In order to be cost effective, you need to be as creative as possible, by taking advantage of the various discounts and cost savings programs. The whole thing comes down to creativity."

Plans available

Blue Cross of California offers plans catering to businesses as small as two employees, while Aetna offers packages to companies as small as four people. Blue Shield packages begin at 10 employees or more. Another avenue that some small businesses are looking down is a new Blue Cross package suite called BeneFits. While most plans require employers to contribute a minimum of 50 percent of the premiums, the Blue Cross requires employers to contribute just 25 percent, putting more of the burden on the employee. However, the BeneFits package limits the number of plans available.

In terms of pricing, according to Barry Cohn, the president and CEO of Tarzana-based RGEB Insurance, health insurance packages for small businesses are also relatively affordable.

Small group insurance is based on age group and ZIP code,

For example, a middle of the road PPO plan for a person in their thirties would cost $302 per month, with the employee cost being $151. For a very popular HMO, plans cost $209 per person per month, with the employee paying $104.50, Cohn said. At Kaiser, a similar HMO plan for a person in their thirties would cost $200.80 per month, split between an employee and employer.

Valencia-based printing firm DiFatta Graphics is an example of another small business that has managed to obtain affordable health care for its employees. By purchasing insurance through a printing trade association, Alan DiFatta, the company's president and owner, offers all 25 of his full-time employees full health and dental benefits. DiFatta employees are offered a choice of Blue Shield of California insurance or Kaiser Permanente, with most opting for Kaiser.

"It's been an almost 50-year philosophy for our company to provide health care for all of its employees. The big companies seem to get upset when they didn't get that extra half-cent out of their dividends and they start hacking benefits; that's not what we're about," DiFatta said. "We're about quality of life for everyone. It probably hurts us in the bottom line, but then again I don't have some investment group looking over my dividends. Providing health care helps morale and helps attract quality people."

DiFatta has continued to bear the full brunt of the steadily rising insurance costs, refusing to shift any of the burden to his employees.

"Our health care costs have been rising dramatically. They've been increasing anywhere from 10 to 20 percent in recent years," DiFatta said. "It's made it harder to run the business. Printing is a tough industry with low margins and expensive equipment. But I can't make my workers pay any of the costs. They're doing the best they can with what they get and we're just trying to help them out as long as we can. Plus, they deserve it."

It's Carly Magarity's belief that lack of knowledge is the main reason why small business owners don't offer health care to their employees. The owner of Woodland Hills-based Time Employee Benefits Insurance Services feels that most companies don't understand how easy it is to obtain relatively affordable health care for their employees.

"A lot of small businesses just don't think health care can be affordable. They don't understand that coverage is guaranteed. They don't know the basics," Magarity said. "They don't know that the premiums are a business deduction and they don't know that they don't have to pay 100 percent of the costs. Quite honestly, many of them just aren't aware that there are so many opportunities available and that their employees regard this as a valuable benefit."

Making choices

But Marcelo "Mike" Quiroga, owner of Van Nuys-based Mike's Roofing Service Inc. isn't a small business owner in the dark about the benefits of health care. Rather, Quiroga claims that the back-breaking costs of workers' comp insurance prohibit him from paying for health care.

"If employers were required to pay for health care, it would kill us. I can't afford it because I have to spend so much money paying for workers' comp insurance. If they forced me to have to pay for health care, I would have to go out of business," Quiroga said. "The insurance needs to be made more affordable. The bigger companies have more employees and they get large discounts. Because we have fewer employees than they have, small businesses would be forced to pay way too much."

While the added costs do have the potential to hinder a company's odds of profitability, Magarity maintains that there are many plans out there that can fit an employer's needs.

"Affordable plans do exist. For instance, in Blue Cross' most recent hospital benefits plan package, they offer traditional plans so that the employers have five choices to choose from," Magarity said. "Employers can give their employees the choice of five plans, they can opt to include dental. It's well put together and for employees under 30, you can pay just $74 a month for the premium."

Small Business Benefits Checklist

1. Find a competent broker who has at their disposal a number of quality insurance companies which they can go for deals. Make sure that the broker has expertise in providing health insurance

2. The broker will put together a proposal for the small business owner to examine.

3. Make sure you see every plan, taking into consideration the advantages and disadvantages of each. Always take into account your company's needs.

4. Make a choice, knowing that discounts are possible though alliances that allow one to pair workers' comp and health insurance. Also know that employers do not have to pay 100 percent of health benefits.